City must address senior housing

Published 8:00 pm, Friday, May 4, 2007

The City of Midland will have to take a hard look in the coming year at how it operates its senior housing facilities.

Both Washington Woods and Riverside Place face projected drops in working capital in upcoming years because of retiree health care costs being added to the budget and rising energy costs.

At Washington Woods the working capital, which is like a savings account used in case operations begin to lose money, is projected to drop below zero in 2010-11. The same thing would happen later at Riverside Place.

The two facilities are facing shorter wait lists and an older clientele with less money to pay for rent. When more units are occupied by income-based renters, it means less money for the city than if the units were occupied by people paying the market rate.

"We have a couple years to react; we have time to study and put together a plan," Midland Fiscal Services Director David Keenan said. "This is a serious issue that we're going to have in a few years and it's something we're working on right now."

Mayor Bruce Johnson said there's just more competition in the marketplace now than when the facilities were built.

"I'm assuming the wait list has gone down because there's more competition out there, so there's more choices for people," he said. "Where previously people would come to Washington Woods or Riverside Place because there were no other facilities, and now there are choices."

City Manager Jon Lynch said the market "has changed dramatically" but there is still a market for the city facilities, which offer housing for fixed-income residents.

"We keep an eye on what our competitors are doing in respect to rents and amenities and things of that nature, and when you look closely at what is going on in our community, you find there is definitely a demand on the lower end of the income scale," Lynch said.

City Planning Director Keith Baker said what's important to look at is the mix of income-based and market rate units.

Right now, Washington Woods is made up of 76 percent income-based units and 24 percent market rate units, while Riverside place is at 44 percent income-based and 56 percent are market rate.

Lynch said a strategy to address the market versus income-based rents will be developed in the next year.

"Thus far the strategy has been keep the building full," he said, but indicated that might shift in the future if the council wants.

Some steps being taken right now to help the budgets include cutting out non-essential services, evaluating staffing levels as staff retires or leaves, evaluating existing contractual agreements and seeking outside funding sources for capital projects and improvements.

Councilman Jim Myers said a presentation on the situation was informative.

"I didn't realize the situation, and that's quite clear," he said.

Councilman Tom Adams said he appreciates the warning about things coming down the road because it gives better understanding of the concerns faced by the city departments.

"That seems like a real issue that's going to be tough to deal with," he said.

Lynch said the key is to look at changes that can be made to improve the outlook in next year's budget.

Reporter Tony Lascari can be reached at tlascari@mdn.net or (989) 839-4273.